Webce Insurance test questions and answers with complete Solution Latest

Agent Thompson received a letter from the Department of Insurance asking her to provide proof of completing the continuing education requirements. Within how many days must Agent Thompson respond to the Department's inquiry? - ANSWER 10 days Abby lives in Ohio, where she is licensed as an insurance producer. She wants to apply for a nonresident license in Pennsylvania. Which of the following conditions must she satisfy? She must move to Pennsylvania. She must surrender her Ohio license. She must be sponsored by a producer licensed in Pennsylvania. She must show her Ohio license is in good standing. - ANSWER She must show her Ohio license is in good standing The requirement that an insurable interest must exist when life insurance is purchased is intended to prevent people from doing which of the following? using life insurance to fund future cash needs using life insurance as a speculative investment on another person's life overusing life insurance designating an ineligible person as the policy beneficiary - ANSWER using life insurance as a speculative interest on another person's life Which one of the following best describes a policy that has a relatively low face amount and has premiums that are paid to an insurance agent who generally calls on the policyowner at home to collect them? group life insurance industrial life insurance ordinary term insurance ordinary whole life insurance - ANSWER industrial life insurance Sylvia's insurer guarantees a fixed death benefit for the policy she owns. Based on this, which one of the following benefits is also most likely guaranteed with this policy? the policy's cash value her ability to borrow an interest-free loan from the cash value policy dividends payment of premiums on Sylvia's behalf in the event of emergencies - ANSWER the policy's cash value Carl is a policyowner who prefers to pay premiums monthly rather than annually. How will Carl's insurance company adjust his premium to accommodate this request? The insurer divides the annual premium by 12 and then adds a modest charge. The insurer simply divides the annual premium by 12. The insurer divides the annual premium by 12 and then reduces the premium amount to reflect the fact that premiums will be paid throughout the year. The insurer divides the annual premium by 12 and then adds a modest charge in the first policy year after which premiums equal the annual premium divided by 12. - ANSWER The insurer divides the annual premium by 12 and then adds a modest charge All of the following statements about key person life insurance are correct, EXCEPT: The business applies for, owns, and is the beneficiary of the policy covering the life of a key employee. Upon the insured employee's death, the employee's surviving family receives the policy's death benefit. Key person, or key employee, life insurance is an example of third-party ownership. Life insurance used as key person life is normally owned by the business rather than the insured. - ANSWER XXX Upon the insured employee's death, the employee's surviving family receives the policy benefit XXX The activities a producer performs to support the insurance company in learning all it can about the applicant when seeking applications for insurance are generally called: field underwriting fiduciary process agency development due diligence - ANSWER field underwriting How is increasing term life insurance normally sold? as an endorsement as a permanent insurance policy as a stand-alone term life insurance policy as a rider attached to a permanent life insurance policy - ANSWER as a rider attached to a permanent insurance policy Andrea bought a $300,000 term-to-age-55 policy. All the following statements about her policy are correct EXCEPT: The policy provides $300,000 of coverage until Andrea reaches age 55. The policy will generate a cash value that is payable at age 55. It is possible that Andrea could convert the term policy to a life insurance policy that provides coverage for Andrea's entire life even if she becomes uninsurable. The premium for the policy stays the same until the policy expires. - ANSWER XXX The policy will generate a cash value that is payable at age 55 XXX The basic purpose for the re-entry option with a renewable term life insurance policy is to let the policyowner: reinstate the policy after it has lapsed for nonpayment of premiums without having to provide evidence of insurability convert the term policy to a permanent life insurance policy renew the policy with a higher face amount without having to provide evidence of insurability renew the policy at lower current rates rather than guaranteed renewal rates - ANSWER renew the policy at lower current rates rather than guaranteed renewal rates Term life insurance is well suited for all the following needs EXCEPT: mortgage protection a source of emergency cash for any financial need inexpensive protection until the policyowner can afford permanent life insurance protection while the family children are living at home or attending college - ANSWER XXX a source of emergency cash for any financial need XXX Premium rates will vary unpredictably depending on the insurer's actual experience in which one of the following types of whole life insurance? straight whole life current assumption whole life limited pay whole life graded premium whole life - ANSWER current assumption whole life Jessica, age 25, buys a $100,000 life insurance policy. The initial premium is lower than straight whole life rates and increases each year for the first ten years of the policy period. After that, the premium levels off and stays at that amount for the life of the policy. What type of policy does Jessica own? 10-pay whole life single premium whole life graded premium whole life modified premium whole life - ANSWER graded premium whole life Which one of the following statements about variable life insurance is correct? Variable life policyowners can invest all of their premiums in the insurer's general account. Subaccounts are managed within the insurer's general account. Variable life policyowners can choose flexible premium payment schedules. With a variable life insurance policy, the policyowner assumes most of the investment risk. - ANSWER With a variable life insurance policy, the policyowner assumes most of the investment risk. Which of the following statements best explains the basic level premium concept of ordinary whole life insurance? The steady reduction of the policy's net amount at risk offsets the cost of pure insurance that rises with age. Funds are withdrawn from the policy's cash value in the later years to pay the rising cost of pure insurance. The death benefit is decreased to offset the rising cost of insurance with age. The insurer averages the cost of pure insurance over the insured's life expectancy so that the mortality charge remains level. - ANSWER the steady reduction of the policy's net amount at risk offsets the cost of pure insurance that rises with age All the following statements about ordinary (straight) whole life insurance are correct EXCEPT: The insured pays premiums for his or her entire life. Premiums remain level. The death benefit increases during the early policy years and then levels off. It has a steadily increasing cash value. - ANSWER XXX the death benefit increases during the early policy years and then levels off XXX Barb, age 40, buys a ten-pay life policy while Jill, age 40, buys a life paid up at age 65 policy. All other factors being equal, which of the following statements is most correct? Barb and Jill will pay approximately the same monthly premium amount every year, and their policies will mature at about the same time. Barb will pay a higher monthly premium over a shorter time than Jill, and their policies will mature at about the same time. Jill will pay a higher monthly premium than Barb, and their policies will mature at about the same time. Barb and Jill will pay approximately the same monthly premium amount every year, but Barb's policy will mature before Jill's. - ANSWER barb will pay a higher monthly premium over a shorter time than Jill, and their policies will mature at about the same time Unlike traditional fixed interest UL policies, many variable universal life policies offer a third death benefit option, which provides a guaranteed minimum death benefit equal to: he policy's net amount at risk plus its cash value the policy's net amount at risk plus its cash value minus the sum of premiums paid the policy's net amount at risk plus the greater of the actual cash value or the sum of premiums paid the policy's net amount at risk plus its cash value plus the sum of premiums paid - ANSWER the policy's net amount at risk plus the greater of the actual cash value or the sum of premiums paid In a front-end loaded universal life contract, when does the insurer deduct a charge to cover the costs of administering the policy? from the cash value after the premium has been deposited to it from the premium payment before it is credited to the policy's cash value once, when the first premium is paid at the start of each policy year - ANSWER from the premium payment before it is credited to the policy's cash value Jack bought a life insurance policy that will provide a lump-sum death benefit plus a ten-year stream of income should he die before a specified date. Five years after purchasing the policy, before the specified date, Jack died and the policy began paying a monthly benefit to his family for ten years. What type of policy did Jack buy? ten-year family maintenance policy ten-year family income policy survivorship life insurance policy ten-year family protection policy - ANSWER ten-year family maintenance policy All of the following statements regarding joint life insurance and survivorship life insurance are correct EXCEPT: Joint life insurance lets the surviving insured purchase an individual policy without having to prove insurability upon the first insured's death. Both joint life and survivorship life have a lower premium than two comparable individual policies covering the two insureds. Joint life insurance is especially popular in the estate planning market. Survivorship life insurance pays the death benefit upon the death of the second insured. - ANSWER XXX joint life insurance is especially popular in the estate planning market XXX How does a family income policy differ from a family maintenance policy? A family income policy combines whole life insurance with decreasing term insurance, while a family maintenance policy combines whole life and level term insurance.